2 Oct 2023

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The General Court annuls the Commission’s decision on the Spanish tax lease scheme regarding the deduction for indirect acquisitions of shareholdings in foreign companies

In 2002, Spain introduced a tax scheme allowing deductions for goodwill resulting from shareholding acquisitions in foreign companies. The Commission had in 2006 stated this scheme did not breach EU State aid rules. However, after a complaint, it re-evaluated and declared the scheme incompatible in two decisions adopted in 2009 and 2011(“the initial decisions”), ordering Spain to recover aid granted under this scheme. However, the Commission allowed the scheme to continue with conditions, thus respecting the principle of protection of legitimate expectations.

In 2012, the Spanish tax authorities issued a binding opinion that applied the scheme to indirect acquisitions. In a decision adopted in 2014, the Commission considered the new interpretation constituted new incompatible state aid and ordered Spain to put an end to the scheme and recover the aid.

Spain and several companies challenged this decision before the General Court  arguing inter alia an infringement of the principle of legal certainty and the principle of the protection of legitimate expectations.

In a judgment adopted on 27 September 2023, the General Court annulled the decision mainly on the basis that the initial decisions already covered both direct and indirect shareholding acquisitions.

Moreover, the Court considered the Commission's responses in 2006 had created a legitimate expectation of the scheme's lawfulness for all shareholding acquisitions (direct and indirect).

For further information: Press release & judgment